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Dear Sir
I am studying provisions (IAS37) on IAS plus and note a comment that contingent liabilities are not accrued but noted. Does this mean that we never put them on SOFP. Is this a new rule?
Hi,
Contingent liabilities have always been disclosed in the notes to the accounts and not recognised under IAS 37. The disclosure would require a description of the nature and potential financial effect of the possible liability.
Just be careful however, as under IFRS 3 on the acquisition of a subsidiary the contingent liability would be measured at fair value in the group accounts. It would still remain disclosed as a contingent liability in the individual accounts of the subsidiary.
Thanks
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